Capital Equipment Financing Program
UCLA departments can obtain low, fixed-rate internal loans for capital equipment or for refinancing existing capital equipment leases through CapEquip, a financing program from UCOP. CapEquip leverages the University's high credit rating to lower borrowing costs for a broad range of purposes beyond construction.
CapEquip does not pay a supplier directly. The program reimburses a department after the supplier has been paid through the normal Purchasing cycle. Reimbursements occur once per quarter, toward the end of March, June, September and December.
The program does not eliminate third-party equipment leasing. Departments needing financing on large transactions ($250K+) should work with Purchasing to see if external lease finance rates are significantly better than the CapEquip rate, offsetting the benefit of CapEquip’s streamlined process. However, the following features make CapEquip an attractive alternative:
- The FY14 CapEquip rate remains 1.99% — no fees, no prepayment penalties.
- The rate is set annually, is good for the entire fiscal year and good for the life of any loans entered into that year.
- The term of a loan can be from 3 to 7 years, though the useful life of the equipment must be greater than or equal to the term of the loan. Debt service is paid to UCOP semiannually by journal entry (as compared to monthly lease payments). Interest is paid in May and November. Principal is amortized once per year in May.
- Purchases can be bundled across vendors — and across departments — into one loan with one repayment schedule. As a whole, the UCLA campus has a minimum loan size of $100K, the “bundled” amount. The overall request is rounded down to the nearest $1,000.
- Many types of equipment can be financed – vehicles, IT, athletic, lab, medical, and diagnostic, etc.; also, software;
- Furniture is excluded from CapEquip financing;
- Federal funds cannot be used on a CapEquip financing;
- Existing capital equipment leases can be refinanced through the CapEquip program.
- CapEquip is designed to be simple: The guidelines are just one page.
- The Purchasing process will be simplified for CapEquip transactions:
- Purchasing issues PO to vendor and Accounts Payable makes payment to vendor — the same as for standard purchase transactions.
- UCOP CapEquip loans reimburse departments for identified transactions once per quarter.
- No bidding lease rates, waiting for delivery and changing payment schedules.
- External lease financing will remain an option as needed.
UCLA is required to submit a summary of its requests annually to UCOP in order to participate in CapEquip, typically in March.
$5 million in CapEquip funding has been reserved for the UCLA campus in FY14. The requests that have been submitted already will receive priority and new requests will be accepted until unreserved funding is gone. Current period utilization can be seen in CapEquip Request Status under Related Information.
To request financing through the CapEquip program, go to the Purchasing home page, then:
- Click on Ask Buying > Ask a Question
- Under the Product drop-down menu, select BruinBuy > Purchasing Questions
Be sure to attach your completed request form available under Related Information.